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Bolivia's government has decided to nationalize South American Silver's (TSX: SAC) embattled Malku Khota project in Potosí department, according to state news agency ABI.
In a meeting on Tuesday, President Evo Morales and community groups from the northern department - some of whom supported the silver-indium project, while others opposed it - agreed to create a committee that would decide when to revoke the Canadian miner's concession.
The meeting was one of the conditions reached over the weekend for the release of the remaining hostages held by protestors opposed to the project. Up to seven people - including workers from the Malku Khota site and a police officer - had been kidnapped in Potosí since the end of June.
Morales had proposed nationalizing the project as early as last year, but said recently that he was hesitant to make a decision due to the divisions within the community.
In the last month, police have clashed with the protestors against the project, who reportedly want to mine the smaller quantities of gold also found at Malku Khota. Some 400 officers were deployed to Potosí last week, and on Friday (Jul 6) at least one person was killed and eight wounded during a confrontation.
Exploration studies at the project site were expected to wrap up by 2015.